Withdrawal of Rs 2,000 banknotes due to increased fake currency in circulation: RBI sources

The government on Friday said that RBI’s decision to withdraw Rs 2,000 note is due to increased fake currency in circulation, RBI sources told Business Today.

As per the sources, the Operation Clean Note Policy is aimed at targeting black money market.

The sources further added that the central bank does not have the authority to demonetise the notes. "We encourage people to deposit and help with the clean note policy. We anticipate that all notes should be deposited within September 30," sources told BT.

The legal tender will continue from October 1, 2023, however it is encouraged for everybody to exchange within the given time period. "This is a similar exercise we did in 2013-2014," sources added. 

RBI on May 19 said that it has decided to withdraw Rs 2,000 denomination banknotes from circulation. However, the notes will continue as legal tender, the central bank said in a circular.

The central bank further advised banks to stop issuing Rs 2,000 denomination banknotes with immediate effect. In a circular, the RBI said that all Rs 2,000 currency notes must be exchanged before September 30, 2023.

"To complete the exercise in a time-bound manner and to provide adequate time for the members of the public, all banks shall provide deposit and/or exchange facilities for Rs 2000 banknotes until September 30, 2023," the RBI circular read.

The circular further added, "The Rs 2000 denomination banknote was introduced in November 2016 underSection 24(1) of RBI Act, 1934, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time. The objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, printing of Rs 2000 banknotes was stopped in 2018-19."

The RBI also pointed out that this denomination is not commonly used for transactions and further, the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public.

"In view of the above, and in pursuance of the 'Clean Note Policy' of the Reserve Bank of India, it has been decided to withdraw the 2,000 denomination banknotes from circulation," the RBI said, adding: "The banknotes in 2,000 denomination will continue to be legal tender."

Watch: Rs 2,000 denomination banknotes withdrawn, will continue as legal tender; What happens to your notes? Know RBI’s advisory on exchange, deposit of Rs 2,000 notes

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